EUR/GBP breaks below 0.8500 mark ahead of EU CPI

The EUR/GBP cross resumed with its near-term corrective move and dropped to a fresh 3-week low level ahead of the flash version of EU CPI data.

The cross, which was already witnessing a near-term corrective move, has now broken through recent trading range support near 0.08500 psychological mark, coinciding with 50% Fibonacci retracement level of 0.8249-0.8725 up-swing. 

On the economic data front, the shared currency failed to benefit from higher-than-expected drop in the number of unemployed people in the region's largest economy, Germany. 

Focus now shifts to the release of flash Euro-zone CPI print for the month of August, which if disappoints should exert further selling pressure and continue dragging the cross lower in the near-term.

Technical levels to watch

From current levels, weakness below 0.8470-65 immediate support is likely to get extended towards 61.8% Fibonacci retracement levels support near 0.8430 region, below which the cross seems to drop towards testing 50-day SMA support near 0.8405-0.8400 region.

On the flip side, 0.8500 psychological mark now becomes immediate resistance, which if cleared has the potential to lift the cross back towards 0.8530-40 strong resistance zone.